Ingram Micro Takes Action To Improve Operating Efficiencies

Company reduces costs with business process improvement; soft IT demand forces steeper cuts to U.S.-based headcount

SANTA ANA, Calif., June 6, 2001

Ingram Micro Inc. (NYSE: IM), the largest global wholesale provider of technology products and supply chain management services, today announced an aggressive plan to improve cost efficiencies, the result of the company's ongoing business process improvement initiative and softening demand within the information technology (IT) industry.

The plan, expected to save approximately $30 to $40 million on an annual basis, calls for a headcount reduction of approximately 1,000 U.S.-based positions. Details of the plan include:

• Closing the Newark, Calif., distribution center and Santa Ana and Rancho Cucamonga, Calif., returns processing centers and downsizing the Miami distribution center to create a sole focus on servicing the Latin American region. All returns processing will be centralized into the new state-of-the-art Harrisburg, Penn., returns center, and business volume from the affected distribution centers will be redirected to other facilities. These actions leverage cost efficiencies derived from distribution center automation and effective inventory management.
• Consolidating the product management division from six product categories into four -- systems, networking and high-end storage, peripherals and software -- which provides greater focus and streamlines resources. Two specialized teams will focus on inventory management and business process improvement across all functions of the U.S. organization.
• Reorganizing IT resources, allowing the company to automate more business systems, integrate e-commerce applications worldwide and better support a services organization environment.
• Restructuring the U.S. sales function into six groups focused on specific customer segments -- corporate resellers, strategic accounts, direct and consumer markets, value-added resellers (VARs) servicing small-to midsize businesses (SMBs), enterprise solutions VARs and government and education VARs -- which improves customer service and avoids duplication of resources.

"Through the business process improvement initiative, which was implemented several months ago, we continue to identify ways to create a more efficient operation and capture new growth opportunities, while maintaining the highest levels of customer service," said Guy Abramo, chief strategy and information officer, Ingram Micro Inc. "The actions we take today will create a more competitive cost structure making Ingram Micro even more resilient in the IT marketplace."

The workforce reduction will affect all levels of the organization, including administrative functions in Santa Ana, Calif., and Buffalo, NY; IT; product management; sales; and associates located in the affected distribution and returns processing centers. These actions will result in a restructuring charge not expected to exceed $15 million in the second quarter.

"We took aggressive action based on our analysis of business process improvements and the market," said Kevin Murai, president, Ingram Micro U.S. "Our decision to make reductions to our headcount is difficult, but necessary. However, the strides we are making in inventory management and automation, for example, enable us to streamline our operations without disrupting our productivity and service objectives. We will continue to make improvements to provide the highest-quality service to our customers."

About Ingram Micro Inc.

Ingram Micro Inc. is the largest global wholesale provider of technology solutions, products and services. The company operates in 36 countries with sales of $30.7 billion for the fiscal year 2000. Ingram Micro's global regions provide the distribution of technology products and services, marketing development and supply chain management services to more than 175,000 technology solution providers and 1,700 manufacturers. The company is focused on maximizing shareowner value and achieving customer satisfaction through innovation in the information technology supply chain.

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